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Obama budget proposal suggests increasing plug-in incentives

February 14, 2012

Mitsubishi i electric vehicles could be eligible for a $10,000 incentive under President Barack Obama's new budget plan. Photo by Davey G. Johnson

President Barack Obama's new budget proposal eliminates the federal tax credit for plug-in electric vehicles, a move that would seem to be designed to please Republicans--save for one small caveat. His new plan would turn the tax credit into an incentive that could cut $10,000 from the purchase price of a new plug-in.

The new incentive, reports Cars.com, replaces the old EV tax credit and replaces it with something called the “Advanced Technology Vehicle” credit. Said credit, rather than taking up to 15 months to be reflected in a plug-in vehicle owner's tax savings, would either go to the vehicle's seller or to its financier. Through 2016, it would max out at $10,000 per vehicle through 2016, with no limit on vehicles sold.

Thereafter, the maximum credit would steadily drop by $2,500 each year--from $7,500 in 2017 down to $2,500 in 2019. Cars.com based its report on analysis from Nissan.

It also notes that the subsidies would be somehow based on mpg-e, and that vehicles costing more than $45,000 would have the benefit capped at today's $7,500, meaning that you wouldn't see an extra $2,500 savings on your new Tesla Model X.

Senate minority leader Mitch McConnell (R-Ky.) has characterized Obama's proposal--which also includes heftier taxes for the wealthy and fewer sops to oil companies--as a “campaign document” and the Wall Street Journal suggests that the budget has little chance of passing in its current form.

What do you think? Should the tax credit stay as it is until plug-in technology becomes less expensive? Should we be subsidizing the technology at all? If so, should the money go directly to dealers and/or finance companies, rather than to the public at large?